The World Bank has projected that Nigeria’s revenue-to-GDP ratio could rise to over 10.5 percent by the end of 2024, following the recent increase in government revenue.
The Nigerian government recently reported a 100 percent rise in revenue to N9.1 trillion in the first half of 2024, compared to the same period last year.
Ndiamé Diop, World Bank country director for Nigeria shared this forecast during an interactive session on ‘Fiscal Reforms for a More Secure Future’ at the 30th Nigerian Economic Summit.
Read also: World Bank outlines key reforms for Nigeria’s economic recovery from 2025
He urged the federal government to sustain key reforms such as the unification of foreign exchange rates and the removal of fuel subsidies.
“Revenue has been increasing quite significantly and we are seeing a significant increase in revenue. We are talking a large amount bigger than the fuel subsidy. The digital reform to increase tax compliance is bearing fruits”, he said.
He emphasised that Nigeria had previously ranked among the lowest in the world in terms of revenue-to-GDP ratio.
Before President Bola Tinubu’s administration introduced reforms, he said the country’s debt servicing in 2022 consumed 100 percent of its revenue, with public expenditure amounting to 12.9 percent of GDP.
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However, only 7.6 percent of that expenditure was covered by government revenue, reflecting the weak revenue-to-GDP ratio.
“There was mostly a fiscal deficit, which means debt. You cannot do that year in, year out, without facing a crisis. I think this is really why fiscal reforms are important”, Diop said.
He explained that relying on debt to fund public spending is unsustainable, especially when revenue remains low. “As debt levels rise, particularly through expensive commercial loans, the burden of debt servicing rises very high.”
Diop stressed that without comprehensive fiscal reforms, public spending needs will continue to grow, and persistent fiscal deficits could destabilise the economy.
In his remarks, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, said the government aims to boost food production to address inflation in the short term.
“We are focusing on increasing food production to reduce inflation. The objective is to make food more accessible, and affordable, and thereby ease the cost of living for Nigerians,” Edun stated.
He outlined government investments for the current planting season, explaining, “During the dry season, we aim to engage one million smallholder farmers, providing them with seeds, fertilisers, and herbicides.”
“This initiative is expected to yield approximately five million tonnes of grains, with an average output of five tonnes per hectare. This should help mitigate inflation, particularly in the short term.”
Edun also highlighted the government’s collaboration with the African Development Bank (AfDB) to establish agricultural processing zones. These zones will support domestic industries by ensuring a steady supply of raw materials.
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